If you own land with others, you are a joint owner. We assess joint owners for land tax in 2 stages:
- Joint ownership assessment — we assess all the joint owners together, on all their jointly owned land as though they were one person. Each unique combination of owners is considered a unique joint ownership, so if you own property with different people you may receive more than one joint ownership assessment.
- Individual assessment — we assess each owner individually on all the taxable lands they own in any capacity, including their interest in any jointly owned land.
If you are assessed for tax on jointly owned land under a joint ownership assessment, we apply a deduction to your individual assessment to reflect that tax has already been assessed on the land as a joint ownership. Your deduction is the lesser of either:
- your share of the tax in the joint ownership assessment (Deduction 1)
- the amount of tax calculated in your individual assessment for your share in the jointly owned land (Deduction 2).
Calculating the joint ownership deduction
- Deduction 1 = A × B
- Deduction 2 = C ÷ D × E
Where:
- A is the proportion (percentage) of the taxpayer’s share of the jointly owned land
- B is the land tax on the jointly owned land ($)
- C is the taxpayer’s share of the jointly owned land ($)
- D is the taxpayer’s total land holdings ($)
- E is the land tax on the taxpayer’s total land holdings ($).
When joint ownership deduction 1 applies
Deduction 1 is your share of the tax in your joint ownership assessment. Generally, you get Deduction 1 when the total value of all the taxable land you own individually, including your interest in the jointly owned land, is greater than the total value of the joint ownership’s taxable land.
For example, you own land jointly with Kate. Together, you own taxable land worth $350,000 in equal shares. Individually, you own taxable land worth $1,175,500, which includes your half interest in the land you own with Kate.
In this example, Deduction 1 would apply because the taxable value of land you own individually is $1,175,500 and this exceeds the value of the land owned jointly by you and Kate, being $350,000.
Example
- At midnight on 31 December of the preceding tax year, Mr Wood and Ms Lee each own 50% of Property A, an investment property with a taxable value of $350,000. Property A is not exempt from land tax.
- Mr Wood does not own any other property. Ms Lee owns one other property in her own name, Property B. It is an investment property with a taxable value of $1,000,000. Property B is not exempt from land tax.
- Mr Wood and Ms Lee, as the joint owners of Property A, will be assessed together in the joint ownership assessment.
- Ms Lee will be assessed separately as both an owner of Property A and owner of other land (Property B).
Joint ownership assessment
Mr Wood and Ms Lee’s joint ownership liability is calculated using the total taxable value of their non-exempt land and applying the appropriate rate of land tax:
- The taxable value of the jointly owned land (Property A) is $350,000.
- The general land tax rate for land holdings valued from $300,000 to less than $600,000 is $1350 + 0.3% of the amount that exceeds $300,000.
- Accordingly, the land tax payable on Property A is $1,500, being $1,350 + (($350,000 – $300,000) × 0.3% = $150).
- Mr Wood and Ms Lee share liability for this amount.
Individual assessment of Mr Wood
As Mr Wood only owns Property A, and the taxable value of his half interest ($175,000) falls into the $100,000 to < $300,000 tax bracket, the tax assessed on his portion of the land is $975.
However, if his interest is over the land tax threshold, but he holds no land other than the jointly assessed land, the joint ownership deduction is equal to his individual tax liability and so no tax is payable.
As such, we do not issue him with an individual assessment and he only has to pay the joint ownership assessment.
Individual assessment of Ms Lee
As Ms Lee owns other property, she receives an individual assessment. It includes all the taxable land she owns, including her share of the jointly owned land.
There are 3 steps to calculating Ms Lee’s land tax liability:
Step 1: Calculating Ms Lee’s tax liability before the joint ownership deduction
- Calculate the total taxable value of Ms Lee’s land holdings:
- Ms Lee’s individual land holding (Property B) is valued at $1,000,000.
- The value of Ms Lee’s joint ownership land holdings is $175,000, being 50% of the taxable value of Property A ($350,000).
- Accordingly, the total value of Ms Lee’s land holdings is $1,175,000 = ($1,000,000 + $175,000).
- Calculate the tax payable on Ms Lee’s total land holdings:
- The general land tax rate for land holdings valued from $1,000,000 to less than $1,800,000 is $4,650 + 0.9% of the amount greater than $1,000,000.
- The land tax payable by Ms Lee before the joint ownership deduction is $6,225, being $4,650 + (($1,175,000 – $1,000,000) × 0.9% = $1,575).
Step 2: Calculating the joint ownership deduction
- Ms Lee is entitled to a joint ownership deduction in her individual assessment. The deduction is the lesser of:
- 50% (proportion of Ms Lee’s share in Property A) × $1,500 (total amount of land tax assessed on Property A) = $750, or
- $175,000 (the value of Ms Lee’s share in the Property A) divided by $1,175,000 (Ms Lee’s total land holdings) × $6,225 (tax on Ms Lee's total taxable land holdings) = $927.13
- Therefore, Ms Lee is entitled to a joint ownership deduction of $750, being the lesser of the 2 deduction amounts.
Step 3: Calculating Ms Lee’s tax liability after the deduction
- By subtracting the lesser amount of $750 from Ms Lee’s total land tax liability ($6,225), the land tax payable by Ms Lee as an individual is $5,475 (i.e. $6,225 – $750).
- Ms Lee is still also liable to pay the joint ownership assessment.
When joint ownership deduction 2 applies
Deduction 2 is the amount of tax which the jointly owned land represents in your total individual tax liability. Generally, you get Deduction 2 when the total value of all the taxable land you own individually, including your interest in the jointly owned land, is less than the total value of all the joint ownership’s taxable land.
For example, you own land jointly with Kate. Together you own taxable land worth $450,000 in equal shares. Individually, you own taxable land worth $350,000, which includes your half interest in the land you own with Kate.
In this example, Deduction 2 would apply because the taxable value of land you own individually is $350,000 which is less than the value of the land owned jointly by you and Kate, being $450,000.
Example
- At midnight on 31 December of the preceding tax year, Mr Wood and Ms Lee each own 50% of Property A, an investment property with a taxable value of $800,000. Property A is not exempt from land tax.
- Ms Lee also owns one other property in her own name, Property B, an investment property with a taxable value of $350,000. Property B is not exempt from land tax.
- Mr Wood and Ms Lee, as the joint owners of Property A, will be assessed together in the joint ownership assessment.
- Ms Lee will be assessed separately as both an owner of Property A and an owner of other land (Property B).
Joint ownership assessment
Mr Wood and Ms Lee’s joint ownership liability is determined using the total taxable value of their non-exempt land and applying the appropriate rate of land tax:
- The taxable value of the jointly owned land (Property A) is $800,000.
- The general land tax rate for land holdings valued from $600,000 to less than $1,000,000 is $2,250 + 0.6% of the amount that exceeds $600,000.
- Accordingly, the land tax payable on Property A is $3,450, being $2,250 + (($800,000 – $600,000) × 0.6% = $1,200).
- Mr Wood and Ms Lee share liability for this amount.
Individual assessment of Mr Wood
As Mr Wood does not own any other taxable lands other than Property A, the deduction is equal to his individual tax liability and so no tax is payable.
As such, we do not issue him with an individual assessment and he only has to pay the joint ownership assessment.
Individual assessment of Ms Lee
As Ms Lee owns other property, she receives an individual assessment that includes all the taxable land she owns, including the jointly owned Property A. There are 3 steps to calculating Ms Lee’s land tax liability:
Step 1: Calculating Ms Lee’s tax liability before the joint ownership deduction
- Calculate the total taxable value of Ms Lee’s land holdings:
- Ms Lee’s individual land holding, being Property B is valued at $350,000.
- The value of Ms Lee’s joint ownership land holdings is $400,000, being 50% of $800,000.
- Accordingly, the total value of Ms Lee’s land holdings is $750,000 ($350,000 + $400,000).
- Calculate the tax payable on Ms Lee’s total land holdings:
- The general land tax rate for land holdings valued from $600,000 to less than $1,000,000 is $2,250 + 0.6% of the amount that exceeds $600,000.
- The land tax payable by Ms Lee before the joint ownership deduction is $3,150, being $2,250 + (($750,000 – $600,000) × 0.6% = $900).
Step 2: Calculating the joint ownership deduction
- Ms Lee is entitled to a joint ownership deduction in her individual assessment. The deduction is the lesser of:
- 50% (proportion of Ms Lee’s share in Property A) × $3,450 (total amount of land tax assessed on the joint ownership assessment) = $1,725, or
- $400,000 (the value of Ms Lee’s share in Property A) divided by $750,000 (Ms Lee’s total land holdings) × $3,150 (tax on Ms Lee's total taxable land holdings) = $1,680.
- Therefore, Ms Lee is entitled to a joint ownership deduction of $1,680, being the lesser of the 2 deduction amounts.
Step 3: Calculating Ms Lee’s tax liability after the deduction
By subtracting the lesser amount of $1,680 from Ms Lee’s total land tax liability ($3,150), we find that the land tax payable by Ms Lee as an individual is $1,470 (i.e. $3,150 – $1,680).
Ms Lee is still also liable to pay the joint ownership assessment.
Why does the lesser deduction apply?
Land tax is assessed on the total value of your taxable land, with tax rates progressively increasing as land values rise.
This means that if there is a difference in the total value of the taxable land owned by the joint ownership and by you individually, there will be a difference in both the:
- tax applying to the jointly owned land under each of the assessments, and
- the values of Deduction 1 and Deduction 2.
You get the lesser of Deduction 1 or Deduction 2 because there are times when the greater deduction would be larger than your liability under your individual assessment and the deduction cannot offset any of liability you have for any other property you own individually or under other arrangements.
Example
At midnight on 31 December of the preceding tax year, Mr Wood and Ms Lee each own 50% of Property A, an investment property with a taxable value of $1,200,000.
Ms Lee also owns an investment property, Property B, a small apartment in a large complex, in her own name, Property B has a taxable value of $50,000.
Joint ownership assessment
Mr Wood and Ms Lee’s joint ownership liability is calculated using the total taxable value of their non-exempt land and applying the appropriate rate of land tax:
- The taxable value of the jointly owned land (Property A) is $1,200,000.
- The general land tax rate for land holdings valued from $1,000,000 to less than $1,800,000 is $4,650 + 0.9% of the amount that exceeds $1,000,000.
- Accordingly, the land tax payable is $6,450, being $4,650 + (($1,200,000 – $1,000,000) × 0.9% = $1,800).
- Mr Wood and Ms Lee both share liability for this amount.
Individual assessment of Mr Wood
As Mr Wood only owns Property A, the deduction is equal to his individual tax liability and therefore no tax is payable.
As such, we do not issue Mr Wood with an individual assessment and he only has to pay the joint ownership assessment.
Individual assessment of Ms Lee
As Ms Lee owns other property, she receives an individual assessment. It includes all of the taxable land she owns, including the jointly owned land.
Step 1: Calculating Ms Lee’s tax liability before the joint ownership deduction
- Calculate the total taxable value of Ms Lee’s land holdings:
- Ms Lee’s individual land holding (Property B) is valued at $50,000.
- The value of Ms Lee’s joint ownership land holdings is $600,000, being 50% of $1,200,000.
- Accordingly, the total value of Ms Lee’s land holdings is $650,000 ($50,000 + $600,000).
- Calculate the tax payable on Ms Lee’s total land holdings:
- The general land tax rate for land holdings valued from $600,000 to less than $1,000,000 is $2,250 + 0.6% of the amount that exceeds of $600,000.
- Accordingly, the land tax payable for land valued at $650,000 is $2,550, being $2,2500 + (($650,000 – $600,000) × 0.6% = $300).
Step 2: Calculating the joint ownership deduction
- Ms Lee is entitled to a joint ownership deduction in her individual assessment. The deduction is the lesser of:
- 50% (proportion of Ms Lee’s share in Property A) × $6,450 (total amount of land tax assessed on the joint ownership assessment) = $3,225, or
- $600,000 (the value of Ms Lee’s share in Property A) divided by $650,000 (Ms Lee’s total land holdings) × $2,550 (tax on Ms Lee's total taxable land holdings) = $2,353.85.
- If Deduction 1 (i.e. 50% of the total amount of land tax assessed on the joint ownership assessment) is applied to Ms Lee's individual assessment, the deduction would be $3,225. This would result in a credit of $675 ($2,550 – $3,225). It would mean that Ms Lee would receive a refund and her individual liability for Property B would be completely offset by her interest in Property A.
- Therefore, the joint ownership deduction in this case is Deduction 2 (i.e. $650,000 divided by $600,000 × $2,550= $2,353.85).
Step 3: Calculating Ms Lee’s tax liability after the deduction
- By subtracting the lesser amount of $2,353.85 from Ms Lee’s total land tax liability ($2,550), the land tax payable by Ms Lee as an individual is $196.15 (i.e. $2,550 – $2,353.85).
- Ms Lee is also liable to pay the joint ownership assessment with Mr Wood.
